Running a business in California brings many opportunities, but also a unique set of challenges for employers. Employers today must navigate legal compliance, talent management, remote work issues, and rising costs, all while trying to run a successful business. As your trusted advisors, we want to highlight some of the most pressing issues California employers face today and how they can affect your bottom line.

Complex Employment Laws and Legal Risks

California is known for having some of the strictest labor laws in the country. The state imposes various requirements related to wages, overtime, breaks, sick leave, and discrimination protections. Failure to comply can expose a business to significant costs including penalties, lawsuits, and audits.

For example, misclassifying workers as independent contractors rather than employees can trigger serious consequences under Assembly Bill 5 (AB 5). Likewise, not adhering to meal and rest break laws or failing to maintain proper payroll records can lead to costly wage claims.

Employers must stay compliant and be up to date on current laws and court rulings. A simple oversight can create a major financial and legal liability.

Attracting and Retaining Talent

The labor market in California remains competitive. Attracting and keeping qualified employees has become more difficult than ever due to rising wages, evolving expectations around work-life balance, and changing generational values.

Offering fair compensation is just one part of the equation. Employees also seek workplaces where they feel valued, supported, and are part of something meaningful. Invest in your employees and the company culture to reduce the risk and cost of employee turnover. When employees feel valued and connected, they stay longer and perform better.

Managing a Remote or Hybrid Workforce

The rise of remote and hybrid work models opens the door to greater talent access and employee satisfaction, but it also adds complexity to compliance and operations. Employers must ensure remote employees are still tracking time accurately, taking required breaks, and working in safe environments.

There are also tax considerations when employees live and work in different states, potentially triggering multi-state filing requirements and complicating payroll reporting.

Establish clear remote work policies and consult with your CPA to understand the tax and regulatory implications of a distributed workforce.

The Cost of Doing Business

Wages, insurance premiums, taxes, and regulatory compliance costs continue to rise in California. Small and midsize businesses often feel these pressures the most. In some cases, the cost of hiring and onboarding a new employee can be thousands of dollars before any return on investment is realized.

Balancing these costs while remaining competitive can be a challenge. Make sure you monitor your labor and other operational costs carefully. Understanding you cash flow impacts are critical to making financial decisions and adjust your company’s budget when necessary.

We can help you analyze your financial data, review trends and make informed decisions based on your financial goals.

How We Can Help

These challenges are not just administrative. They directly affect your profitability, compliance, and growth potential. Employers who stay ahead of these issues avoid costly surprises and gain a competitive advantage.

As a CPA firm, our role extends well beyond tax compliance. We work closely with our clients on the day-to-day financial and operational responsibilities of being an employer. This includes cost planning, risk assessment, implementing internal controls, and developing financial models that support strategic, informed decision-making. We are here to help you think proactively and act strategically, so that you can focus on growing your business with confidence.

 

Business Owners: You Are Invited!

Attend our free meetup on Tuesday, April 29th, from 4:30–7:00 PM at Charlie’s Restaurant (Windsor Golf Club), to explore common pitfalls and solutions to these challenges.

This is a can’t-miss opportunity to build resilience in your organization and ensure you’re up to speed on California’s latest employment challenges. Sign Up Here